Business persons in the construction industry can look forward to new opportunities following an amendment in the Code of Good Practice on Broad-Based Black Economic Empowerment (BBBEE), which has resulted in a new code as at 02 November 2017.
According to Kwakho Mpeho, Education, Training and Transformation Manager at the Master Builders Association North (MBAN), this new code will open up new opportunities for those in the industry. Until now, members of the construction industry have had to abide by the Department of Trade and Industry’s generic code. Mpepho said that companies with current BBBEE certificates under the old code can continue to use them until they expire, when they will have to be assessed under the new code.
One of the major changes introduced by the new code as compared to the generic code is the readjustment of thresholds and targets for enterprises across the various categories. For instance, Qualifying Small Enterprises (QSEs) with at least 51% black beneficiaries would qualify for elevation to BBBEE Level 2 status under the generic codes. Under the new Code, however, an entity with the same BBBEE profile is required to further comply with one of the two additional elements, namely Skills Development or Preferential Procurement and Supplier Development.
Mpepho said those who enjoyed a decent BBBEE status under the generic codes will now struggle to maintain their current level and they should also expect to drop in one or more levels. He also said all contractors should have their BBBEE profiles immediately reviewed and updated using the new code’s measurements and targets so that they are able to both improve their ratings and understand the new system.
Another one of the changes in the new code is that verification agencies are now compelled to surrender Construction Sector BBBEE Certificates and Scorecards (Including Reports) to the Construction Sector Charter Council, which will compile industry empowerment and transformation reports as required by the statute.
Also, Equity Equivalent Programmes (EEPs), which are used to enable multinationals who cannot sell equity to black partners to achieve compliance in other ways, are recognised by the new code. The requirements are aligned to the provisions of the generic code but, said Mpepho, the minister will assess how well they work within the construction industry and will give further direction within 12 months.
The new code will apply to material suppliers/manufacturers and build environment professionals as well as traditional construction companies. Material suppliers can apply for the exemption if they fall under another sector’s codes. Companies with annual turnovers below a certain threshold are exempted from the Code and can rely on affidavits and CIPC certificates in place of a BBBEE certificate. The thresholds are R1.8 million or less for build environment professionals, and R3 million or less for contractors and manufacturers.
“Learning what the code seeks to achieve and then using it strategically to build your business by accessing new sources of business, particularly in the public sector and by bringing new partners on board, makes good business sense. The Master Builders Association urges members not only to comply but to use the Code strategically to serve themselves and the industry as a whole,” Mpepho concluded.
Statement issued by Blackbook Communications. Information compiled by Pulane Choane.